The second dot com bubble – party on dudes

“Strange things are afoot at the Circle-K.”

Twitter looses money and yet is valued at $10 billion USD. Groupon turn down $6 billion USD from Google. While Facebook is valued at a sum comparable with VISA at $60 billion USD.

This feels like a most excellent adventure.

I’ve blogged before that I thought the Web 2.0 world was starting to look like an over inflated dirigible – my previous blog here. But now the same concern is expressed in todays Observer – Is this the start of the second dot com bubble. It all seems strangely familiar and the themes in the article ones that I have seen before (and sadly often).

The Web 2.0 world has undoubtedly changed the social and commercial landscape – no debate. But when Facebook is valued at the same level as VISA I fear we have completely lost the plot. I knew Facebook had been valued at daft money – but I hadn’t realised how completely nonsensical the valuation was – VISA. VISA for petes sake.

That’s a hard thing to say for a software developer but at times like this I can’t help myself pointing out that we appear to have travelled to a world where “bowling averages are way up and mini golf scores way down, and we have more excellent water slides than any other planet we communicate with” .

So is it a bubble and will it burst? Well it certainly shows all the signs of being a bubble – valuations that bear no resemblance to profits and all the baloney that goes along with “new” business models. Have a 10 minute wander through Twitter and look for social media advice – everyone is an expert. It’s like 1987 and 2000 when everyone could predict the next share to buy/sell/stag – instinct tells me that when everyone is an expert it’s time to take a contrary or at least reflective view.

But will this bubble burst? I’m not so sure that a proper burst is on the cards. The Web 2.0 Social world is delivering – it is changing social interaction, business, politics, even crime and the occasional revolution. But unlike 2000 when the internet was being over sold (56k modems for goodness sake!) the Web 2.0 Social World is already delivering, building opt in databases of rich marketing data that marketers could only previously dream about. So I suspect that when the burst comes it is likely to be more like a deflating tyre as opposed to a fan hitting moment. Some of the big names will of course vanish – but who can guess which ones will be gone in 5 years time? Personally I could live without Quora despite my occasional poke at it.

We may well be in a bubble inflating web 2.0 world – but that’s the nature of things. Whether it’s Dutch Bulbs, dot coms or Collateralised Debt Obligations we do have a tendency to follow things in increasing numbers until they go bang.

The valuations being thrown around are nonsense – but that’s not to say that the social world isn’t worth a lot of money. Just don’t think the crazy valuation party is going to last, but in the meantime in the words of Abraham Lincoln “Be excellent to each other. And… PARTY ON, DUDES”.


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